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The Annals of Regional Science

, Volume 46, Issue 2, pp 267–293 | Cite as

What attracts foreign direct investment in China’s real estate development?

  • Canfei He
  • Junsong Wang
  • Shaoming ChengEmail author
Original Paper

Abstract

Foreign direct investment in real estate development (FDIRE) in China has been disproportionately agglomerated in the coastal region while has considerably diffused to some inland provinces along the Yangtze River. There is also significant spatial autocorrelation in the provincial distribution of FDIRE. Controlling for the spatial effects, statistical analysis indicates that FDIRE follows their international customers to China and pursues local profit opportunities as well. They avoid high financing cost and labor cost provinces but favor provinces with higher housing prices. FDIRE in China responds to the provincial differences in land and housing commercialization, and demands good regional governance, strong law enforcement and developed services. The findings imply that foreign investors in China’s real estate industry stress returns to capital while appreciate the conducive institutions when choosing locations.

JEL Classification

F293.3 

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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.College of Urban and Environmental Sciences, Lincoln Institute Center for Urban Development and Land PolicyPeking UniversityBeijingChina
  2. 2.Department of Public AdministrationFlorida International UniversityMiamiUSA

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